Under which of the following price elasticities will a decrease in price lead to the greatest increase in expenditures by consumers?
A) 0
B) 0.3
C) 1.0
D) 1.8
E) 2.3

Question

Quizplus · Accepted Answer

The greater the price elasticity of demand, the greater the change in quantity demanded in response to a change in price. If the price elasticity of demand is more than 1 (as it is in option E), a decrease in price will lead to a proportionally greater increase in quantity demanded, resulting in a greater increase in expenditures by consumers.

Under Which of the Following Price Elasticities Will a Decrease